True there is an apparent divergence in separate actions leading to apparent separate outcomes. But this is mostly a challenge to the likes of Simplified MBA Economics.
The seeming appearance of the US Fed Inflating is just that. The cost of the cash being pumped into the US Financial System (or what ever is really left of it, that is to say) presently is directly on the shoulders of the US Citizen (too often refered to limitedly as the TAX PAYER though the effect is actually affecting all their Citizens). There is a hugh concurrent CONTRACTION in the MONEY SUPPLY in the Private Domain as contrast to the US FED/Treasury Public Domain). And it is the interaction of these two that gives the appearance of separate actions and separate outcomes. The Squeezing of Credit Leverage is puting the tremendour pressure on Commodities at present (from my limited perspective) which is a Private Capital Distruction EFFECT and a cause of DEFLATION in Commodities Prices (for the time being, atleast). The Currency being pumped into the Banking system in an effort to keep the RTEAL Economy afloat (call it consumption in Business and Trade) as long as need be to get the Private Banking System stabelized and functioning. The Private Banking System though having mounds of cash on hand is simply keeping where it is, ON HAND. Thus, no money for Business to do it's day to day Business. Also, by keeping so much cash on hand (refusing to lend it out) the Private Banks are essentially taking the CRACK away from Hedge Fund types. What do Hedge Funds do then when their Customers/clients want/need to withdraw funds from the Hedgies? They have mostly but one choice. They have to sell off their Investments- their Hedges. And who would pay more to a forced Seller than need be? Noone! Thus, Investments/Hedges drop in price to attract Buyers.
So long as the Central Banks can keep Private Banks appearing solvent and assume responsibility for as much of Private Banking's Poor to Very Bad Mortgage Products, the Private Banks can (il)legitimately remain open and claim to be Solvent(???). Thus having to ability to beand remain in the Business.
Where things end up has to be continuation of the basic System (and then and only then can the needed changes PLUS proper REREGULATION be worked over and carefully implaced) so as to NOT have divergence. Couse the Theory says that Divergence can not exist??? Increasin amounts of money in circulation with Product Prices decreasing. In theory this is not possible? Thus, if anything the outcome in the short to intermediate term will be Increased Citizen Debt Obligations (Government responsibility) and stability in Private Sector (things like Consumer and Commodities Prices) and the once so called Private Banking System (which will have to be fixed - mentioned above - over time).
If the Private Banking System does get fixed the Government will get back a good protion of the Currency they Pumped out there) and a very good many Hedge Fund types will have been wiped out - just like the likes of rosseau & co., and many of the fund feeders to the Hedgies will look to where they can start a new SCAM! Those of them that survive all of this, that is. And they will have plenty of cleaver non employed idle minded schemers to pick from to act as theor stooges and cronies. Why? Couse theis characters do not know how to do much of anything else. that's why!
This MESS stuff will, or has to go something as the above suggests. There are no real alternatives. Most especially with the current prevelance of MBAism.
Old Joe
PS Do have to go now cause there is much I need (have to do, like rake leaves, etc.) to do (and can do) to be able to keep a focus on all that is NOT.
